5 Tips for small businesses setting up an auto enrolment pension scheme in 2017

Figures from The Pensions Regulator (TPR) reveal that more than 95 per cent of the small employers required to put their staff into a workplace pension by June 2016 had complied with the law.

To the end of September, almost 257,000 employers had completed their automatic enrolment duties and enrolled over 6.7 million workers on to an auto enrolment pension scheme.

During the first quarter of 2017, the automatic enrolment legislation will step up a gear as more than 1 million small businesses will need to meet their automatic enrolment duties. And so with a busy time ahead, we asked Caroline Bateman of Enrolsme to offer her tips on how small business can set up an auto enrolment pension scheme in 2017, ‘stress free’;

1. Decide on your definition of earnings

The first thing an employer needs to understand is the definition of earnings; which earnings will be included in the pensionable salary and – more importantly – which are not. There are three different definitions of earnings:

  • Total pay – where all elements are included – salary, bonuses, benefits and any overtime.
  • Basic pay – where calculations are based on the base salary, and contributions are only on this
  • Qualifying earnings – where they only pay between the lower and upper limit of National Insurance.

Many small businesses are opting to enrol employees on to an auto enrolment pension based on total pay.

2. Choose the right pension provider

The sooner an employer can make the decision as to which provider to go with, the better. More than one million businesses will need to meet their automatic enrolment duties in 2017. This means that pension providers are going to be ‘inundated’ with new company pension scheme applications so businesses should lock in the terms as soon as possible.

If you leave it late it’s possible there could be delays with your application. Some pension providers may even reach capacity and decline new company pension applications.

RELATED: 5 things to consider when choosing a pension scheme for your business

3. Engage your staff in your new workplace pension

auto enrolment pension 2017Employers need to make a decision on how they will engage their staff with their workplace pension.

If you choose a quality scheme, this can act as a catalyst for communicating it to your workforce, to let them know you have set up a pension, and with one of the better pension providers.

The law says an employer only needs to send out one piece of communication. By only sending out the minimum levels of correspondence, you risk being asked lots of questions.

I’d always go over and above – educate your staff and make them feel as if they want to be part of their pension planning, and let them know that you too are contributing to their pension and playing your part.

4. Select the right levels of support

It is important to seek the right levels of support for setting up your employees’ workplace pension scheme. It doesn’t have to be a time-consuming and laborious task.

Ask your pension provider to give you reminders and helpful tips at every stage of the process. Be prepared to work with your chosen provider to make the auto enrolment process as straightforward and manageable as possible.

Try to work with an organisation that has real experts when it comes to automatic enrolment and can offer you good support and guidance.

5. Think about automatic enrolment NOW

Don’t put it off and delay. So many companies will be turning to their financial advisers, accountants or payroll providers. Everyone is going to feel swamped, do try to get one step ahead of the process. I suspect that even calling TPR during 2017 could be tricky – only time will tell.

At the end of the day, an employer that doesn’t need to stage until 2017 could set up as early as they want. Complete the forms now and then put your workers into a workplace pension at the right time.

Further auto enrolment resources

Enrolsme is a complete online automatic enrolment solution. A small business can set-up a workplace pension using Enrolsme in just 30 minutes. And before 28th February 2016, they can also benefit from a £500 off incentive using code: MM500.

You’ll also find lots more help on setting up a workplace pension for your small business in these guides;

More on starting and running your own business

ByteStart is packed with help and tips on all aspects of starting and running a small business. Check out some of our most popular guides;

Starting Up

Funding your business

Money & Tax matters

Promoting your business

Legal issues

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